The Role of the Indonesian Government in the Era of Banking Disruption Innovation

Poni Sukaesih Kurniati,Suryanto Suryanto

doi:10.15549/jeecar.v9i1.881

Abstract

Digital disruption innovation in the financial services industry is an innovation that has succeeded in changing the financial industry landscape, starting from its structure, technology, and marketing model. The emergence of the Financial Technology (Fintech) industry marks a disruptive innovation in the financial services industry. This study aims to analyze the role of the Indonesian government in the era of banking disruption. The research method used was descriptive analysis with a qualitative approach—data obtained through interviews and literature study, Bank Indonesia, the Indonesian Fintech Association, and the National Bank Association. Before the research started, the validity of the data was first tested. The results of the study state that the government encourages banking and fintech to grow side by side and is directed to collaborate immediately. The role of the government as a regulator has been performed by the Indonesian Financial Services Authority (OJK) and Bank Indonesia (BI, Central Bank of Indonesia) by issuing various regulations. The study concluded that there are three areas that regulators need to monitor and guard, including misuse of public funds, protection of the public, private data, and money laundering.

Highlights

Disruptive innovation is an era of massive changes caused by innovations that change business systems and arrangements to newer levels (Kagermann, 2015)
The banking industry is currently experiencing a period of disruptive innovation with the emergence of the financial technology industry
This study aims to analyze the role of the government in the era of banking disruption

Summary

Introduction

Disruptive innovation is an era of massive changes caused by innovations that change business systems and arrangements to newer levels (Kagermann, 2015). The banking industry is currently experiencing a period of disruptive innovation with the emergence of the financial technology industry. Banking must be more creative and innovative to survive the era of disruption. Not a few banks are losing money and are forced to close some of their branch offices because they are not ready to face competition in the era of disruption (Weill & Woerner, 2015). Before it is too late, banks must recognize the era of disruption and find the right strategy to survive the competition. Technological developments can impact banking, including increasing productivity, saving costs, simplifying

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